Uncertainty hits companies’ hiring plans

Growth in new permanent jobs dropped to its lowest level in almost two years last month as economic uncertainty impacted companies’ hiring plans.

Recruitment agencies across the Midlands registered only a fractional rise in permanent placements in December, according to The KPMG and REC, UK Report on Jobs: Midlands.

The increase was the weakest in the current 29-month sequence of expansion and was the slowest of all four monitored English regions.

Anecdotal evidence suggested that stronger than normal demand in November had not been matched in December. At national level, permanent placements continued to increase in December. Though solid, the latest rise was the softest recorded since April 2017.

Billings received from the employment of temp workers rose at a solid, but weaker rate in December. Although firms stated that clients required more temporary workers, some noted that candidate availability was low.

The rate of expansion eased to an almost two-year low and was the slowest across the four monitored English regions. At the same time, UK temp billings grew at a faster rate than in November. The sharp increase was also slightly quicker than the average for 2018.

The rate of increase in permanent vacancies across the Midlands remained sharp in December, despite a much slower rise in permanent placements. However, the pace of expansion was the weakest since April 2013 and well below the UK average.

Vacancies requiring temporary workers also continued to grow at a steep pace. In contrast to the trend seen across the UK as a whole, the rate of growth softened.

The supply of permanent staff in the Midlands continued to fall at a steep rate in December, according to recruitment agencies in the region.

The decline was attributed to uncertainty in the market stemming from Brexit.

The decline in temp labour supply eased for the second month running in December. Although still steep and faster than the UK average, the fall was the softest since September.

The contraction in temp supply was linked to a reduction in the number of migrant workers in the labour market and skill shortages.

Starting salaries for permanent workers rose at a steep pace in December, albeit one that was below the UK average. The Midlands registered the slowest rate of wage inflation across the four monitored English regions, with the pace of increase easing for the third consecutive month.

Kate Holt, consulting partner at KPMG in the Midlands, said: “With the number of available vacancies rising at a slower pace than all other English regions, it’s evident that the job market in the Midlands is facing some pressures.

“December is typically a bit of a quieter period in the jobs market but Brexit has amplified that effect. The uncertainty this brings means that not many will want to move jobs. Consequently, employers need to offer increasingly attractive and creative packages to bring new employees on board.”

Neil Carberry, chief executive at the REC, says: “It’s no surprise that growth in new permanent jobs dropped to its lowest level in almost two years last month, because economic uncertainty is now affecting companies’ hiring plans. But the underlying strength of our labour market is still there – vacancies are high and temporary placements rose in the run-up to Christmas. There are opportunities out there for people who want to change job in 2019.

“Businesses will be looking for certainty on Brexit plans soon, so that they can get on with driving growth and jobs. Recruiters will be helping employers to do that – high employment rates mean that there are significant shortages in some parts of our labour market.”